Estimate of IPAB repeal is a head-scratcher

The Congressional Budget Office’s estimate that repealing IPAB would cost $3.1 billion has people on the Hill scratching their heads even more than they usually do on a CBO health spending score.

On one hand, CBO is looking at Medicare spending trends and seeing signs that growth is truly slowing. Not a recession-linked short-term blip, but a trend. And that means the Independent Payment Advisory Board — which was designed as a backstop to curb spending if needed — probably won’t have to recommend payment changes until at least 2022.

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Yet at the same time CBO is saying IPAB won’t really have anything to do for a decade, it’s also saying that repealing IPAB would cost $3.1 billion. Deciphered, it means CBO is saying Medicare spending would be $3.1 billion above the level it would need to be to avert triggering IPAB recommendations to bring it down.

Rep. Phil Roe (R-Tenn.) confessed to being confused as to how something that is not projected to save money until a decade from now could actually cost money before that. Roe sponsored the IPAB bill that, until late last week, had been enjoying relatively smooth sailing in the House, including bipartisan voice votes in two committees.

But the $3 billion meant the Republicans have to come up with an offset to Roe’s bill — and the one they have identified, a cap on noneconomic malpractice awards — alienated most Democratic supporters of IPAB repeal, erasing the rare note of bipartisanship in an effort to undo a piece of the Affordable Care Act still favored by the White House

But the $3 billion was CBO’s way of hedging its bets — of evaluating “what if” scenarios that could mean the 15-member IPAB would have to act before 2022, explained Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities.

“If it’s highly uncertain, CBO can say, ‘Oh well, there’s a pretty good chance that some year our estimate will turn out low and there’s a very high chance that IPAB will be triggered,’” Van de Water said. “Based on their estimate and the uncertainty surrounding their projections, this is what they think repealing IPAB will cost.”